Cash discount surcharge programs may sound too good to be true, but they’re actually legal in most states. But there’s a difference between discounting a cash-paying customer’s total and charging a credit card user extra. While cash discount programs have been around for years, it wasn’t until 2013 that MasterCard and Visa stopped prohibiting companies from charging credit card users an extra fee.
Anytime a business tries to charge customers an extra fee for using a credit card, it is called a surcharge, and it is legal in most states.
This is an ever-changing market with impactful legal decisions just around the corner. It’s possible that all states will prohibit traditional cash discounting in the future. Traditional cash discounting programs work differently than surcharge programs. Traditionally, all prices include the credit card convenience fee and then discount for those customers using cash.
By using a cash discount surcharge program, you won’t have to worry about how industry lawsuits could affect your business because listed prices reflect cash payments with a convenience fee being added to the price, not removed.
Limited Service Charge
It’s vital that you apply the service charge fairly. This service charge must be applied to indiscriminately to all credit cards.
It’s important to distinguish that the basis of the cash discount surcharge program is an extra fee for using a credit card not a discount for using cash. Thus, the convenience fee is actually a “non-discount fee.” It’s illegal to penalize a customer for using a credit card. It’s also illegal to apply this same policy to a debit card transaction using a PIN.
Your business must have clear signage explaining the cash discount surcharge program and the convenience fee. You should keep these signs in an easily visible place such as on the door and near the cash register, so your customers can make an informed decision on whether to pay with cash or credit.
As a business, you need to be sure to clearly show the amount of the service fee on the receipt. The receipt should also display the customer’s total before and after the service fee is added.
By using proprietary technology from Wholesale Payments Direct, you won’t have to worry about whether or not your receipts comply with cash discount surcharge laws. Our technology will do the math for you and will automatically print your receipts properly.
Wholesale Payments Direct will provide you with everything you need to get started in a cash discount surcharge program, including the proprietary technology and the proper signage. If you have any questions about the regulations for cash discount surcharge processing, contact Wholesale Payments Direct. We’ll make sure that your business is completely in compliance so you can start saving money right away!